Gold is not the barometer of fear it once was, observers say, citing the relatively short-lived, tepid response of bullion markets to the horrific terrorist attacks on the United States, which closed down the heart of the U.S. financial system.

"You are seeing a different response than we have seen previously," said Geoffrey Carter, the president of Broad Oak Associates, a Toronto mining finance company.

"Even with the threat of the big event, gold is not reacting the way it used to. In the old days, we would have seen $350 [U.S.] an ounce."

U.S. currency, commodity and stock exchanges remained closed Wednesday. The attacks on the Pentagon in Washington, D.C., and the World Trade Center in New York seemed to have few lingering effects in a rather subdued day of trading Wednesday in the gold markets.

In London, gold was fixed Wednesday at $279 an ounce, down from its highest price of $289 reached on Tuesday following the terrorist attack. It is still up $7.40 an ounce from Monday's close.

There was no trading Wednesday on the Comex, a division of the New York Mercantile Exchange, which is about five blocks away from the collapsed World Trade Center.

That has caused liquidity to dry up in the bullion markets and if major trades had been attempted the market could have become quite volatile, traders said.

Normally, the Comex market, which operates from 8:20 a.m. until 2:30 p.m. Eastern time, is closely followed by world traders in bullion. Traders expect the Comex to reopen for business Thursday.

"A lot of people in London are not too anxious to make a quote," said George Parrill, the director of precious metals at ScotiaMocatta, the metals trading arm of Bank of Nova Scotia. "Until the [U.S.] market opens people are playing it very cautiously."

Traders these days take a sharp upward move as a chance to sell rather than a sign to climb on board for a ride, Mr. Parrill said.

"It's not a one-way street any more," he said. "In the old days, you would see catastrophes and wars and gold would take off. It doesn't happen these days."

Some of the upward pressure on gold could have been taken off because of Wednesday's auction by the Bank of England of another 20 tons of gold.

The auction by the Bank of England had an allotment price of $280 an ounce and it was 4.3 times oversubscribed. According to Reuters, it attracted bids totalling 2,755,200 ounces.

The Bank of England's previous auction in July was 4.1 times oversubscribed. At the last auction on July 11, the bank sold 20 tons at $267.25 an ounce.

The Bank of England's sale was the 14th in a series of auctions it is holding to halve its gold reserves. The bank has sold 335 tons of gold since July, 1999, and the bank had stated its goal is to sell 415 tons of gold over five years to reduce its holdings to 300 tons.

Gold traded around $279 an ounce after the auction. The $4 spread between the bid and the offering prices remained very large when compared with the 50-cent spreads seen in sessions before the attacks.

"On balance it has been a good, orderly stable market," said Rhona O'Connell, the market analysis manager at the World Gold Council in London. "Gold has done its job, really."

Gold has outperformed individual currencies such as the yen and the rand as investors made a flight to quality.

Wednesday's pullback in the price of gold is not surprising, Ms. O'Connell said. "It's a natural reaction. Nothing moves in a straight line."

One trader speculated that some of the buying pressure Wednesday was prompted by some players covering their short positions and establishing positions ahead of the bank auction.

John Ing, the president of Toronto investment dealer Maison Placements Inc., said that trading was constrained Wednesday because of the absence of U.S. traders.

However, the outlook for gold remains positive because the problems in the United States will lead to additional interest rate cuts and that will put pressure on the U.S. dollar. The weakening of the U.S. dollar will lead to higher gold prices, Mr. Ing said.

Wednesday, base metal prices gave up most of the gains they made following the terrorist attack. The drop is thought to reflect commodity traders' concerns that the U.S. economy will slow significantly as consumers cut back on spending.

With files from Reuters

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